Bile salt hydrolases (BSHs) catalyze the "gateway" reaction in a wider pathway of bile acid modification by the gut microbiota. Because bile acids function as signaling molecules regulating their own biosynthesis, lipid absorption, cholesterol homeostasis, and local mucosal defenses in the intestine, microbial BSH activity has the potential to greatly influence host physiology. However, the function, distribution, and abundance of BSH enzymes in the gut community are unknown. Here, we show that BSH activity is a conserved microbial adaptation to the human gut environment with a high level of redundancy in this ecosystem. Through metagenomic analyses we identified functional BSH in all major bacterial divisions and archaeal species in the gut and demonstrate that BSH is enriched in the human gut microbiome. Phylogenetic analysis illustrates that selective pressure in the form of conjugated bile acid has driven the evolution of members of the Ntn_CGH-like family of proteins toward BSH activity in gut-associated species. Furthermore, we demonstrate that BSH mediates bile tolerance in vitro and enhances survival in the murine gut in vivo. Overall, we demonstrate the use of function-driven metagenomics to identify functional anchors in complex microbial communities, and dissect the gut microbiome according to activities relevant to survival in the mammalian gastrointestinal tract.